MBA Notes

Usual Contents of Work Paper File

The following are the usual contents of work paper file:

1. A complete list of all the books in use, and the names of the clerks in charge of each of each should be prepared.

2. All cash and cheques in hand on the closing date of the audit period should be sent to bank, if possible, and if not, the Cash book should be kept written up to the date of the auditor’s visit.

3. A statement reconciling the Bank balance as per cash book with that of the Bank statement should be ready together with a Bank Certificate.

4. All postings, additions, carry-forwards etc, should be ready written in ink, the requisite balances extracted and trial balance agreed.

5. Schedule of debtors, creditors, duly agreed with their control account in the general ledger should be kept ready with confirmation of the parties regarding balance due to or by them.

6. All important contacts, title deeds and other documents having any bearing on accounts to be kept ready for reference.

7. Minutes books, copies of Partnership Deed or Memorandum and Articles of Association and Prospectus etc. to be kept at hand.

8. All vouchers should be available arranged in order of books entries.

9. Bills receivables, post-dated cheques, bonds and securities and investments should be ready for production when required and a list thereof kept ready.

10. List of all prepared expenses, advances, accrued income and of outstanding expenses etc, to be prepared and kept ready.

11. A complete list of stocks of stores should be prepared.

12. A list of over-dues and doubtful debts included in the schedule of debtors stating suggested provisions deemed desirable against possible loss should be prepared.

13. The draft Profit and Loss Account and Balance sheet be prepared, and in case of limited company, should be passed by the Directors.

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Meaning of Interim Dividend

Interim Dividend is that which is paid before the final dividend is declared. it is a dividend paid in between the two final dividends. It is a dividend which is paid between the two annual general meetings. It is a dividend which is completely within the powers and authority of the directors and for which the sanction of the shareholders is not legally required. It is paid when in the opinion of directors sufficient profit has been made.

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Product Positioning and Market Positioning

Product Position

A product’s position is the way the product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing products. Thus, Tide is positioned as a powerfull, all-purpose family detergent; Solo is positioned as a liquid detergent with fabric softener; Ivory Snow is positioned as the gentle detergent for fine washables and baby clothes. In the automobile market, Toyota Tercel and Suburu are positioned on economy, Mercedes and Cadillac on luxury, and Porsche and BMW on performance. Volvo positions powerfully on safety.

Market Positioning

Market positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Thus, marketers plan positions that distinguish their products from competing brands and give them the greatest strategic advantage in their target markets.

In positioning its product, the company first identifies possible competitive advantages on which to build the position. To gain competitive advantage, the company must offer greater value to chosen target segments, either by charging lower prices than competitors do or by offering more benefits to justify higher prices. Then if the company positions the product as offering greater value, it must deliver that greater value. Thus, effective positioning begins with actually differentiating the company’s marketing offer so that it gives consumers more value than they are offered by the competition. Once the company has chosen a desired position, it must take strong steps to deliver and communicate that position to target consumers. The company’s entire marketing program should support the chosen positioning strategy.

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Some Useful Definitions of Ethics and Corporate Governance

The Ecological Vision: Reflections on the American ConditionSri Aurobindo : But that which determines his ethical being is his relations with God, the urge of the Divine whether concealed in his nature or conscious in his higher self or inner genius. He obeys an inner ideal, nor to a social claim or a collective necessity. The ethical imperative comes not from around, but from within and above him.

Peter F. Drucker The Ecological Vision (1993): Above all, the ethics or aesthetics of self-development would seem to be tailor-made for the specific dilemma of the executive in modern organization. Their function demands the self-discipline and the self-respect of the superior man.


RGarrett and Klonoski, 1986:2: Business ethics is concerned primarily with the relationship of business goals and techniques to specifically human ends. It studies the impacts of acts (DECISIONS)on the good of the individual, the firm, the business community and society as a whole…business ethics studies the special obligations which a person and a citizen accepts when he or she becomes a part of the world of commerce.

Robert C. Solomon Ethics and Excellence (1992): ….integrity, in the face of conflict of the virtues, is the challenge rather than the answer. It is moral courage… moral courage is not self-sacrifice… Moral courage is not self-righteous obstinacy and it is not at all opposed to compromise…Moral courage includes an understanding of the big picture, the purpose(s) of the organization, and the way in which the organization or some part of it thwarts its own best intentions.

Corporate Governance is a system by which companies are run. It relates to the set of incentives, safeguards and the dispute resolution process that is used

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Perfect teams of a SBU

Eight Roles in a Perfect Team for SBU
Click on Image to Enlarge
Contain the correct mix of two different types of role

• functional roles, such as engineer or help desk
• team roles

  • Team roles are defined as an individual’s tendency to behave, contribute and interact with others in a particular way.

  • These are the nine team roles. This does not mean that the ideal team contains nine people, all resolutely sticking to a role assigned to them at birth! It does mean that, for example, a team of five people should be able to cover all nine roles effectively.

  • Each role contributes particular strengths to the team. They also have weaknesses. These weaknesses are allowable since the members of a perfect team both tolerate and compensate for one another’s weaknesses.

Rock:
Characteristics

Individualistic, serious-minded, unorthodox.

Rocks are innovators and can be highly creative. They provide the seeds from which major developments grow. Usually they prefer to operate by themselves at some distance from the other members of the team, using their imagination and often working in an unorthodox way. They tend to be introverted and react strongly to criticism and praise. Their ideas may often be radical and may lack practical constraint.

Rocks are independent, clever and original, and may be weak in communicating with other people on a different wavelength.


COORDINATOR:

Characteristics

Calm, self-confident, controlled.

The distinguishing feature of Co-coordinators is their ability to cause others to work towards shared goals. Mature, trusting and confident, they delegate readily. In interpersonal relations they are quick to spot individual talents and to use them to pursue group objectives. While Co-coordinators are not necessarily the cleverest members of a team, they have a broad and worldly outlook and generally command respect.


SHAPER:

Characteristics

Highly-strung, outgoing, dynamic.

Shapers are highly motivated people with a lot of nervous energy and a great need for achievement. Often they seem to be aggressive extraverts with strong drive. Shapers like to challenge, to lead and to push others into action – and to win. If obstacles arise, they will find a way round – but can be headstrong and emotional in response to any form of disappointment or frustration.

Shapers can handle or even thrive on confrontation.




TEAM WORKER:

Characteristics

Socially orientated, rather mild and sensitive.

Team Workers are the most supportive of a team. They are mild, sociable and concerned about others, with a great capacity for flexibility and adapting to different situations and people. Team Workers are perceptive and diplomatic. They are good listeners and are generally popular members of a group. They cope less well with pressure or situations involving the need for confrontation.


IMPLEMENTER:

Characteristics

Conservative, dutiful, predictable.

Implementers are well organized, enjoy routine, and have a practical common sense and self-discipline. They favour hard work and tackle problems in a systematic fashion. On a wider front they hold unswerving loyalty to the organization and are less concerned with the pursuit of self-interest.

However, Implementers may find difficulty in coping with new situations.


COMPLETER-FINISHER:

Characteristics

Painstaking, orderly, conscientious, anxious.

Completers, or Completer-Finishers, have a great capacity for follow-through and attention to detail, and seldom start what they cannot finish. They are motivated by internal anxiety, even although outwardly they may appear unruffled. Typically they are introverts who don’t need much external stimulus or incentive. Completer-Finishers dislike carelessness and are intolerant of those with a casual disposition. Reluctant to delegate, they prefer to tackle all tasks themselves.


SPECIALIST:

Characteristics

Professional, self-starting, dedicated.

Specialists are dedicated individuals who pride themselves on acquiring technical skills and specialist knowledge. Their priorities are to maintain professional standards and advance their own subject. While they show great pride in their own work, they usually lack interest in other people’s work and even in other people themselves. Eventually, the Specialist becomes the expert by sheer commitment along a narrow front. Few possess the single-mindedness, dedication and aptitude to become a first-class Specialist.

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Disclosure Policy of The MBA Notebook

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Disclosure Policy of MBA-My Notes

This policy is valid from 08 January 2009

This blog is a personal blog written and edited by me. For questions about this blog, please contact bvishaal@gmail.com.

This blog accepts forms of cash advertising, sponsorship, paid insertions or other forms of compensation.

 The compensation received may influence the advertising content, topics or posts made in this blog. That content, advertising space or post may not always be identified as paid or sponsored content.

 The owner(s) of this blog is compensated to provide opinion on products, services, websites and various other topics. Even though the owner(s) of this blog receives compensation for our posts or advertisements, we always give our honest opinions, findings, beliefs, or experiences on those topics or products. The views and opinions expressed on this blog are purely the bloggers’ own. Any product claim, statistic, quote or other representation about a product or service should be verified with the manufacturer, provider or party in question.

 This blog does contain content which might present a conflict of interest. This content may not always be identified.

To get your own policy, go to http://www.disclosurepolicy.org

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Comparison of financial and management accounting

There are two broad types of accounting information:

  • Financial Accounting: geared toward external users of accounting information

  • Management Accounting: aimed more at internal users of accounting information

Although there is a difference in the type of information presented in financial and management accounting, the underlying objective is the same – to satisfy the information needs of the user.

Financial Accounts

Management Accounts

Financial accounts describe the performance of a business over a specific period and the state of affairs at the end of that period. The specific period is often referred to as the “Trading Period” and is usually one year long. The period-end date as the “Balance Sheet Date”

Management accounts are used to help management record, plan and control the activities of a business and to assist in the decision-making process. They can be prepared for any period (for example, many retailers prepare daily management information on sales, margins and stock levels).

Companies are required by law to prepare and publish financial accounting. The level of detail required in these accounts reflects the size of the business with smaller companies being required to prepare only brief accounts.

There is no legal requirement to prepare management accounts, although few (if any) well-run businesses can survive without them.

The format of published financial accounts is determined by several different regulatory elements:

  • Company Law

  • Accounting Standards

  • Stock Exchange

There is no pre-determined format for management accounts. They can be as detailed or brief as management wish.

Financial accounts concentrate on the business as a whole rather than analysing the component parts of the business. For example, sales are aggregated to provide a figure for total sales rather than publish a detailed analysis of sales by product, market etc.

Management accounts can focus on specific areas of a business’ activities. For example, they can provide insights into performance of:

  • Products

  • Separate business locations (e.g. shops)

  • Departments / divisions

Most financial accounting information is of a monetary nature

Management accounts usually include a wide variety of non-financial information. For example, management accounts often include analysis of:

  • Employees (number, costs, productivity etc.)

  • Sales volumes (units sold etc.)

  • Customer transactions (e.g. number of calls received into a call centre)

By definition, financial accounts present a historic perspective on the financial performance of the business

Management accounts largely focus on analysing historical performance. However, they also usually include some forward-looking elements – e.g. a sales budget; cash-flow forecast.

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Indirect Costs

Indirect costs are those costs that are incurred in the factory but that cannot be directly associate with manufacture. Again these costs are classified according to the three elements of cost, materials labour and overheads.

  • indirect materials: some costs that we have included as direct materials would be included here, such as screws and glue: they are here providing they are immaterial in cost. Check carefully here what material means since some materials on the edge of being direct or indirect … know you product, process and materials. Other indirect material costs are said to include lubricants, cleaning materials.

  • indirect labour: labour costs of people who are only indirectly associated with manufacture: management of a department or area, supervisors, cleaners, maintenance and repair technicians

  • indirect expenses: the list in this section could be infinitely long if we were to try to include every possible indirect cost. Essentially, if a cost is a factory cost and it has not been included in any of the other sections, it has to be an indirect expense: there is no choice about this since this is all that there is left! Here are some examples include:

  • depreciation of equipment, machinery, vehicles, buildings

  • electricity, water, telephone, rent, Council Tax, insurance

Total indirect costs are collectively known as overheads.

Finally, within Product Costs, we have Conversion Costs: these are the costs incurred in the factory that are incurred in the conversion of materials into finished goods.

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The Classification of Period Costs

The scheme shows five sub classifications for Period Costs. When we look at different organisations, we find that they have period costs that might have sub classifications with entirely different names. Unfortunately, this is the nature of the classification of period costs: it can vary so much according to the organisation, the industry and so on. Nevertheless, such a scheme is useful in that it gives us the basic ideas to work on.

Administration Costs: literally the costs of running the administrative aspects of an organisation. Administration costs will include salaries, rent, Council Tax, electricity, water, telephone, depreciation … again, a potentially infinitely long list. Notice that there are costs here such as rent, Council Tax, that appear in several sub classifications: in such cases, it should be clear that we are paying rent on buildings, for example, that we use for manufacturing and storage and administration and each area of the business must pay for its share of the total cost under review.

Without wishing to overly extend this listing now, we can conclude this discussion by saying that the costs of Selling, the costs of Distribution and the costs of Research are all accumulated in a similar way to the way in which Administration Costs are accumulated. Consequently, our task is to look at the selling process and classify the costs of running that process accordingly: advertising, market research, salaries, bonuses, electricity, and so on. The same applies to all other classifications of period costs that we might use.

We should also discuss the Finance Costs that we have included in the Period Costs. Finance costs are those costs associated with providing the permanent, long term and short term finance. That is, within the section headed finance costs we will find dividends, interest on long term loans and interest on short term loans.

Finally, we should say that we can add any number of sub classifications to our scheme if we need to do that to clarify the ways in which our organisation operates. We will also add further sub classifications if we need to refine and further refine out cost analysis.

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